This company manufactures and distributes healthcare products and systems in areas such as anesthesia, incubation, oxygen therapy and suction, as well as medical gas pipelines and networks. Based in Oxfordshire, the company exports to over ninety countries worldwide.
Many of its customers are world players in the healthcare sector.
The senior management team were concerned that the company was underperforming in its procurement function. Around 50% of company’s turnover is spent with third parties on direct and indirect materials, and the CEO wanted to know where the company stood in comparison with best practice, and how the company’s procurement policies and strategies could be improved.
ADR Sourcing was asked to carry out a complete procurement and supply chain audit. Through a series of interviews with 25 stakeholders, specialists and managers across the business, our experts performed an evaluation of how effectively the company carries out its purchasing, identified key staff and their skill levels, and performed an expenditure analysis using sophisticated diagnostic tools.
It became clear from our analysis that the company was failing to involve purchasing experts or concerns within its new product development process. The use of the same team to conduct both transactional purchasing and sourcing activities meant that the latter was often neglected.
The majority of effort was being spent on transactional activities, without the necessary discussions and negotiations with suppliers.
ADR’s detailed report identified potential purchasing savings of more than 5.5 per cent. Recommendations in the report included the creation of a new strategic sourcing team, separate from day-to-day purchasing.
The company acted quickly to act on the recommendations, and restructured the procurement team, separating strategic sourcing form transactional procurement. The strategic sourcing side is now much more closely aligned with new product development. They also aligned transactional procurement to the manufacturing cells they have on the shop floor.
The report gave the senior management a clear and objective roadmap for making the change necessary to creating a leaner supply chain, along with a clear definition of what savings are possible.
The process of developing the report also increased engagement across the business, and helped to give key stakeholders greater awareness of procurement best practice.
The purchasing teams now have much clearer roles and responsibilities, along with clearer KPIs (key performance indicators). The teams are now also more keenly focused on delivering what matters most to the business.
Increased engagement Better procurement practice